Almost every freelancer has a horror story or two about contract negotiations gone awry. To help freelancers avoid the most common pitfalls when negotiating contracts, Health Journalism 2014 included a session titled Contracts 101. This session was important for independent health care journalists concerned about the business side of freelancing. Among the topics covered were the dreaded indemnity clauses, liability exposure, and how to estimate fees accurately.

Contracts 101 featured two freelancers (Kendall Powell, a science writer and editor, from Lafayette, Colo.; and Greg Smith, a photojournalist from Westcliffe, Colo.) and a lawyer in private practice, James Gregorio of Greensboro, N.C. Heather Boerner, an independent journalist from San Francisco, was the moderator. Cheryl Platzman Weinstock, a freelance writer in Connecticut, organized the panel but was unable to attend the conference.

Each speaker offered excellent advice on how freelancers can avoid the problems inherent in contract negotiations and what to do when publishers insert indemnity clauses in contracts. When they include these clauses, they often say, “Take it or leave it.” Whenever possible, Smith suggested freelancers should use their own contracts rather than settle for whatever publishers offer. Publishers draft contracts to suit their needs and rarely consider the needs of freelance writers, he said.

In either case, writers should limit the rights they give to publishers. Few publishers will need all rights forever, but commonly ask for that anyway, he said.

Keep in mind that when publishers ask for all rights, every part of the contract is negotiable and everything has a price, Smith said. Therefore, freelance writers should set limits wherever possible. For instance, limit the number of revisions required before adding an additional fee, he suggested. Also, specify how much the publisher will pay for the work and when payment will be made.

On the troubling question of indemnity clauses, Smith was unequivocal: Little people should not indemnify big companies. “It just is not right to do so, especially for things beyond your control,” he said. Often, such clauses will require writers to indemnify a publisher for all causes of action, even those causes that may arise from editing an article.

Sometimes publishers will refuse to make changes in contracts despite adding onerous clauses, Smith said. If no changes are allowed, the writer should mark up the contract anyway, make a copy and send it to the publisher. Simply by requesting such changes in writing the writer will force the publisher to reject the changes, and this rejection may be useful if any action is brought against the writer, Smith advised. At the very least, the writer will be able to say he or she suggested these changes and the publisher refused to negotiate, he explained.

Another challenging issue for freelancers is how to set a fair price. Smith suggested writers consult with other writers and visit the National Press Photographers Association website to use the cost of business calculator. Even though the calculator was built for photographers, it will help writers understand their costs and thus improve their ability to estimate what they need to get from each assignment, he said.

After calculating all costs of doing business, writers may need to generate $100,000 in gross income annually at a rate of $400 per day* for 50 weeks, Smith said. “You will need $100,000 gross for $40,000 net,” he added.

Just as Smith suggested that everything has a price, Gregorio offered a similar assessment, saying, “You can negotiate anything.”

For 16 years, Gregorio has represented journalists, authors, photographers and other individuals seeking advice on contract law. In that time, he has learned that writers should not sign contracts when publishers say no changes are allowed. “You don’t have to sign whatever they give you. They may say the deal is off. But don’t accept that,” he said.

He also offered this advice: Read every word of the contract and pay particular attention to the representations and warranties. “In these sections you are promising certain things,” he explained. Such promises are the services the writer must deliver. Gregorio also suggested that writers should limit the rights they grant so that they can resell works when appropriate. If publishers want all rights, then each right has a price the publisher should pay, he added.

Gregorio agreed with Smith that writers should not indemnify corporations. Publishers add such clauses to frighten writers against being negligent by plagiarizing others, for example, he said. Publishers generally will not sue writers because there’s little to gain from such lawsuits. “But as a policy, I advise clients not to indemnify big corporations,” he said.

Powell agreed, offering several ways writers can limit their liability and modify indemnity clauses. To limit liability exposure, Powell suggested buying liability insurance and changing one’s business structure to an S corporation, limited liability corporation, or whatever is most applicable under state law.

Establishing such business structures will help freelancers protect their personal assets, she explained. “That way, any contract you sign will be between the publisher and the business entity you establish,” she said.

Another way freelance writers can limit their liability exposure is by striking or revising any onerous clauses in contracts, she said. Delete indemnity clauses, for example, or suggest that any suit must arise from an actual breach of the contract, not an alleged breach, she said. Do not allow the publisher to settle any claim with your funds, and set a cap on any claims at the amount you will collect in fees from the work, advised Powell, who wrote the forward and afterward of The Science Writers’ Handbook, which includes a chapter on contracts.

One final word of advice came from Gregorio, who noted that writers are always working under agreements to deliver written words for a fee. Such spoken agreements are in fact contracts, whether written on paper or not. Therefore, it is best to commit these agreements to writing and have both parties sign the documents, he said.

Clarification added June 15, 2015:

In an email, Gregorio asked to clarify comments we attributed to him. We reported that he said, “writers should not sign contracts when publishers say no changes are allowed,” and in his email he said his position is more nuanced. “My point was not that writers should not sign contracts when publishers say no changes are allowed,” he wrote. “Rather my point was that writers do not have to sign the first contract they are first handed. When they are worried about rocking the boat, writers might not ask for anything for fear that the publisher will rescind the offer. But that isn’t going to happen. It rarely hurts to ask for changes. Ask and you might receive.”

Also, we reported that, “Gregorio agreed with Smith that writers should not indemnify corporations.” Again, he explained his position more fully, writing, “My position was (and still is) that, as a practical matter, the indemnity provision is pretty inconsequential. Sure, ask to delete the paragraph, but don’t sweat it if the publisher refuses. It’s there because, first, it is required by the publisher’s insurance policy, and, second, the publisher wants to scare the writer into being scrupulous about the contents of the article. Despite appearances, it is not there because the publisher expects the writer to actually pay a gazillion dollars in the unlikely event of litigation. Quit worrying about the indemnity provision and focus on the representations and warranties clause because a breach of the representations and warranties can result in termination of the agreement and no payment.”

*An earlier version of this post said writers may need to generate $100,000 in gross income annually at a rate of $400 per week for 50 weeks.

8 thoughts on “For freelancers, ‘Contracts 101’ was important session at #ahcj14”

This summary was helpful. AHCJ needs an ongoing dialogue about work-for-hire agreements, how to counter the onerous provisions of “contributor agreements,” through suggested revisions and what to charge for licensing away specific rights.

I know of one major publisher of healthcare publications that has just instituted contracts that are so horrendous, I have quit writing for it. To have a copyright attorney negotiate with the major publisher would have cost me nearly one-fourth of what I earn from the publication in a year. Independent writers need an ASCAP-type organization.

40 percent of one’s gross for expenses? Am I interpreting that correctly? I’ve been full-time freelance, self-supporting, for 30 years. I’ve never had that high a percent in expenses–more like 10 percent. Maybe if you need photography equipment, but not for writing and editing, in my experience.
Otherwise, this sound pretty discouraging to those just starting out as independents.

I admit that the numbers Greg gave in his example seem very high and yes, it is a bit skewed if you are including photography equipment expenses and insurance. So I just did a quick run of the calculator with my lower writer expenses, and it still came out that if I wanted an annual *salary* of $40,000, then I need to make $53,000 to cover my overhead. That still comes out to expenses being almost 25% of my income. (Also, I adjusted the “billable” days to be the number of days I work in my part-time schedule.)

I did not even include a fraction of my mortgage as part of my expenses or the health insurance premiums that come out of my husband’s paycheck. In a way, the calculator is showing you what you need to make to cover ALL of your expenses related to doing business in order to leave you with enough “salary” leftover that is yours to spend on shoes or whatever :)

I agree we don’t want to alarm newcomers and 10% expenses is certainly reasonable as a freelance writer and editor. But I also think this kind of exercise can help established freelancers think more clearly about how to ensure they actually make the “salary” (net) that they desire.